News

Dollar Tumbles as Fed Cuts Rates

USD

The dollar index, which measures the greenback against a basket of major currencies, tumbled to a one-week low of 97.29 on Fed's rate cut. The Federal Open Market Committee concluded its meeting by lowering interest rates by 25 basis points to 1.50-75% as widely expected. The Fed's Chairman Jerome Powell stated that the risks to the outlook shifted more positively, and the economy has been resilient. However, the Fed didn't provide a clear signal that interest rates will remain at their levels in the future. The US 10-year yields tumbled to 1.762%, the EURUSD edged higher to $1.1170, and the GBPUSD rose to $1.2949.

CAD

The Bank of Canada left interest rates unchanged at 1.75% as widely expected while signaling that the downside risks are increasing. The bank stated that the resilience of the Canadian economy "will be increasingly tested" as trade conflicts and uncertainty persist. The statement was considered dovish and a hint that interest rates could move lower in the coming meetings. The USDCAD climbed to a two-week high of 1.3205, and the EURCAD rallied to a six-week high of 1.4703.

JPY

The Bank of Japan left its monetary policy unchanged while modifying its forward guidance on interest rates to more clearly signal future chance of rate cut. Governor Kuroda expects a delay in the pickup in the global economy due to downside risks. Also, he indicated that the bank has a lot of room to deepen negative rates. The GBPJPY rose to a one-week high of 140.68, and the USDJPY hovered near the 200-day exponential moving average at 108.75.

Metals

Gold prices surged as the Federal Reserve lowered interest rates for the third time this year. The shift in monetary policy stance from tightening to easing was in favor of gold prices. The price of a gold ounce soared advanced to $1500, the price of a silver ounce rose to $18.01, and palladium posted a fresh all-time high of $1825.

Oil

Oil prices edged higher as major central banks expressed their willingness to do whatever it takes to support the economy. The Federal Reserve lowered interest rates, the Bank of Japan adjusted rates forward guidance signaling future rate cut, and the Bank of Canada sounded dovish despite leaving policy on hold. Monetary policy easing measures would support the economic pickup and would lead to higher oil demand in the future. Market participants ignored the US Energy Information Administration report, which showed a buildup in inventories by 5.702 million barrels last week. The West Texas Intermediate crude futures rose to $55.46, and Brent futures raced higher to $60.73.

Major Economic Events

GMT Country Event Expectation Previous

10:00

EU

CPI (YoY) (Oct) 

0.7%

0.8%

10:00

EU

GDP (YoY) 

1.1%

1.2%

10:00

EU

Unemployment Rate (Sep)

7.4%

7.4%

12:30

US

Core PCE Price Index (YoY) (Sep)

1.7%

1.8%

12:30

CA

GDP (MoM) (Aug)

0.2%

0.2%


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